1988 (4) TMI 192 - AT - Central Excise

Summary

Issues: Classification of "Silver Palladium Bimetal Sheets" under the Customs Tariff Act, 1975.

The judgment pertains to an appeal against the classification of "Silver Palladium Bimetal Sheets" under the Customs Tariff Act, 1975. The Customs authorities in Madras classified the goods under Heading No. 71.05/11(1), while the appellants sought re-classification under sub-heading (2) of the same Heading and a refund of excess duty paid. The dispute revolved around whether the alloy should be treated as an alloy of silver or platinum based on the weight percentage of precious metals present in the composition. The statutory note provided specific rules for classifying alloys of precious metals based on their composition.

The composition of the goods, comprising 70% silver and 30% platinum, was not disputed. The statutory note 4 to Chapter 71 of the Customs Tariff Schedule outlined the classification rules for alloys of precious metals. It stipulated that alloys containing more than two percent by weight of a specific precious metal should be treated as an alloy of that metal. Palladium, being a metal of the platinum group, was to be treated as platinum for classification purposes. Therefore, the subject alloy, containing more than two percent platinum (including palladium as platinum), should be classified as an alloy of platinum.

The department argued that since the alloy contained over two percent silver by weight, it should be classified as an alloy of silver. However, this argument was based on an incorrect interpretation of the classification rules. The lower authorities erroneously relied on Clause (c) of Chapter Note 4, which applied to "other alloys containing two percent or more silver," disregarding the applicability of Clause (a) to the subject alloy. It was clarified that if an alloy falls under Clause (a) or (b) of the statutory note, it cannot be classified under "other alloys" in Clause (c). Consequently, the subject alloy should have been classified under sub-heading (2) of Heading 71.05/11 as an alloy of platinum, not under sub-heading (1) as determined by the lower authorities.

The Tribunal concluded that the subject alloy was correctly classifiable under sub-heading (2) of Heading 71.05/11 as an alloy of platinum, and not as classified under sub-heading (1). Therefore, the appeal was allowed in favor of the appellants, granting them consequential relief.